Schedule of Canada

Annex I

1. CANADA

Sector: All Sectors
Sub-Sector:
Industry Classification:
Type of Exception: Article 312 (Market Access – Investment)

Measure(s):

• Canada Business Corporations Act,
• RSC 1985, c C-44 Canada Business Corporations Regulations, 2001, SOR/2001-512
• Canada Cooperatives Act, SC 1998, c 1
• Canada Cooperatives Regulations, SOR/99-256

Description:

1. A corporation may place constraints on the issue, transfer, and ownership of shares in a federally incorporated corporation. The object of those constraints is to permit a corporation to meet Canadian ownership or control requirements, under certain laws set out in the Canada Business Corporations Regulations, 2001, in sectors where Canadian ownership or control is required as a condition to receive licences, permits, grants, payments, or other benefits. In order to maintain certain Canadian ownership levels, a corporation is permitted to sell shareholders’ shares without the consent of those shareholders, and to purchase its own shares on the open market.
2. The Canada Cooperatives Act provides that constraints may be placed on the issue or transfer of investment shares of a cooperative to persons not resident in Canada, to permit cooperatives to meet Canadian ownership requirements to obtain a licence to carry on a business, to become a publisher of a Canadian newspaper or periodical or to acquire investment shares of a financial intermediary and in sectors where ownership or control is a required condition to receive licences, permits, grants, payments and other benefits. If the ownership or control of investment shares would adversely affect the ability of a cooperative to maintain a level of Canadian ownership or control, the Canada Cooperatives Act provides for the limitation of the number of investment shares that may be owned or for the prohibition of the ownership of investment shares.
3. For the purposes of this exception Canadian means “Canadian” as defined in the Canada Business Corporations Regulations, 2001 or in the Canada Cooperatives Regulations.

2. CANADA

Sector: All Sectors
Sub-Sector:
Type of Exception: Article 312 (Market Access – Investment), Article 313 (Performance Requirements)

Measure(s):

• Investment Canada Act, RSC 1985, c 28 (1st Supp.)
• Investment Canada Regulations, SOR/85-611

Description:

1. Under the Investment Canada Act, the following acquisitions of control of Canadian businesses by “non-Canadians” are subject to review by the Director of Investments:
   1. any direct acquisition of a Canadian business with assets of $5 million or more;
   2. any indirect acquisition of a Canadian business with assets of $50 million or more;
   3. any indirect acquisition of a Canadian business with assets between $5 million and $50 million that represent more than 50 per cent of the value of the assets of all the entities the control of which is being acquired, directly or indirectly, in the transaction in question.
2. Except as set out in paragraphs 3 and 7, the Director of Investments will review a direct “acquisition of control”, as defined in the Investment Canada Act, of a Canadian business by a non-Canadian investor who has the benefit of international trade agreements if the value of the Canadian business is not less than $600 million, adjusted in accordance with the applicable methodology in January of each subsequent year as set out in the Investment Canada Act.
3. The higher threshold in paragraph 2 does not apply to a direct “acquisition of control” of a Canadian business by a state-owned enterprise that is a non-Canadian investor who has the benefit of international trade agreements. Such acquisitions are subject to review by the Director of Investments if the value of the Canadian business is not less than $375 million in 2016, adjusted in accordance with the applicable methodology in January of each subsequent year as set out in the Investment Canada Act.
4. An investment subject to review under the Investment Canada Act may not be implemented unless the Minister responsible for the Investment Canada Act advises the applicant that the investment is likely to be of net benefit to Canada. This determination is made in accordance with 6 factors described in the Act, summarized as follows:
   1. the effect of the investment on the level and nature of economic activity in Canada, including the effect on employment, on the use of parts, components, and services produced in Canada, and on exports from Canada;
   2. the degree and significance of participation by Canadians in the investment;
   3. the effect of the investment on productivity, industrial efficiency, technological development, and product innovation in Canada;
   4. the effect of the investment on competition within an industry or industries in Canada;
   5. the compatibility of the investment with national industrial, economic, and cultural policies, taking into consideration industrial, economic, and cultural policy objectives enunciated by the government or legislature of any  Province likely to be significantly affected by the investment; and
   6. the contribution of the investment to Canada’s ability to compete in world markets.
5. In making a net benefit determination, the Minister, through the Director of Investments, may review plans under which the applicant demonstrates the net benefit to Canada of the proposed acquisition. The Minister can receive undertakings in connection with a proposed acquisition that is the subject of review. In the event of noncompliance with the Investment Canada Act, the Minister may seek a court order directing compliance or any other remedy authorized under the Investment Canada Act.
6. A non-Canadian who establishes or acquires a Canadian business, other than those that are subject to review, must notify the Director of Investments.
7. The review thresholds set out in paragraphs 2 and 3 do not apply to an acquisition of a cultural business.
8. In addition, the specific acquisition or establishment of a new business in designated types of business activities relating to Canada’s cultural heritage or national identity, which are normally notifiable, may be subject to review if the Governor-in-Council authorizes a review in the public interest.
9. An indirect “acquisition of control” of a Canadian business, other than a cultural business, by non-Canadian investors having the benefit of international trade agreements, is not reviewable.
10. Notwithstanding Article 313 (Performance Requirements), Canada may impose or enforce a measure or condition the receipt or continued receipt of an advantage that requires an investor of a Party to transfer technology, a production process, or other proprietary knowledge to a person or a Party, in Canada in connection with the review of an investment under the Investment Canada Act.
11. Except for measures or conditions relating to technology transfer as set out in paragraph 10 of this exception, Article 313 (Performance Requirements) applies to measures or conditions imposed or enforced under the Investment Canada Act.
12. For the purposes of this exception: a “non-Canadian” means an individual, government or agency thereof or an entity that is not Canadian and “Canadian” means a Canadian citizen or permanent resident, a government in Canada or agency thereof, or a Canadian-controlled entity as described in the Investment Canada Act.

3. CANADA

Sector: Energy (Oil and Gas)
Sub-Sector: Crude petroleum and natural gas industries; services incidental to mining
Industry Classification: CPC 120, 883
Type of Exception: Article 201 (Non-Discrimination), Article 313 (Performance Requirements)

Measure(s):

• Canada Oil and Gas Operations Act, RSC 1985, c O-7
• Canada–Nova Scotia Offshore Petroleum Resources Accord Implementation Act, SC 1988, c 28
• Canada–Newfoundland and Labrador Atlantic Accord Implementation Act, SC 1987, c 3 Measures implementing the Canada–Yukon Oil and Gas Accord, including the Canada–Yukon Oil and Gas Accord Implementation Act, SC 1998, c 5, s 20 and the Oil and Gas Act, RSY 2002, c 162
• Measures implementing the Northwest Territories Oil and Gas Accord, including implementing measures that apply to or are adopted by Nunavut as the successor territories to the former Northwest Territories, Measures implementing the Accord between the Government of Canada and the Government of Quebec for the joint management of petroleum resources in the Gulf of St. Lawrence, or any other similar federal-provincial accords related to the joint management of petroleum resources

Description:

1. Before any work, activity, or development plan may be approved under the Canada Oil and Gas Operations Act, a “benefits plan” must be approved by the Minister responsible for that Act.
2. A “benefits plan” is a plan for the employment of Canadians and for providing Canadian manufacturers, consultants, contractors, and service companies with a full and fair opportunity to participate on a competitive basis in the supply of goods and services used in proposed work or activity referred to in the benefits plan.
3. The Minister responsible for that Act has the authority to require that a benefits plan includes an “affirmative action program” to ensure that disadvantaged individuals or groups have access to training and employment opportunities or can participate in the supply of goods and services used in proposed work referred to in the benefits plan.
4. Provisions continuing those set out in the Canada Oil and Gas Operations Act are included in laws which implement the Canada–Yukon Oil and Gas Accord and the Northwest Territories Oil and Gas Accord.
5. Provisions continuing those set out in the Canada Oil and Gas Operations Act may be included in federal laws or regulations to implement accords with various Provinces, including the Canada-Quebec Gulf of St. Lawrence Petroleum Resources Accord. For the purposes of this exception these accords and implementing legislation shall be deemed, once concluded, to be existing measures.
6. The Canada–Nova Scotia Offshore Petroleum Resources Accord Implementation Act and the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act have an equivalent requirement for a benefits plan but also require that the benefits plan ensures that:
   1. the corporation or other body submitting the plan establishes in the applicable province an office where appropriate levels of decision-making are to take place, prior to carrying out work or an activity in the offshore area;
   2. expenditures be made for research and development to be carried out in the province, and for education and training to be provided in the province; and
   3. first consideration be given to goods produced or services provided from within the province, where those goods or services are competitive in terms of fair market price, quality and delivery.
7. The Boards administering the benefits plan under these Acts may also require that the plan include provisions to ensure that disadvantaged individuals or groups, or corporations owned or cooperatives operated by them, participate in the supply of goods and services used in proposed work or activity referred to in the plan.

4. CANADA

Sector: Energy (Oil and Gas)
Sub-Sector: Crude petroleum and natural gas industries; services incidental to mining
Industry Classification: CPC 120, 883
Type of Exception:
Article 313 (Performance Requirements)

Measure(s):

• Hibernia Development Project Act, SC 1990, c 41
• Canada–Newfoundland and Labrador Atlantic Accord Implementation Act, SC 1987, c 3

Description:

1. Under the Hibernia Development Project Act, Canada and the Hibernia Project Owners may enter into agreements. Those agreements may require the Project Owners to undertake to perform certain work in Canada and Newfoundland and Labrador and to use their best efforts to achieve specific Canadian and Newfoundland target levels in relation to the provisions of a “benefits plan” required under the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act. “Benefits plans” are further described in this Schedule I-C-6.
2. In addition, Canada may impose in connection with the Hibernia project a requirement or enforce a commitment or undertaking for the transfer of technology, a production process, or other proprietary knowledge to a national or enterprise in Canada.